Regulatory Commission of Alaska v. Matanuska Electric Association, Inc., 022219 AKSC, S-15944

Docket Nº:S-15944, S-15973
Opinion Judge:MAASSEN, JUSTICE.
Party Name:REGULATORY COMMISSION OF ALASKA, Appellant, v. MATANUSKA ELECTRIC ASSOCIATION, INC.; CHUGACH ELECTRIC ASSOCIATION, INC.; GOLDEN VALLEY ELECTRIC ASSOCIATION, INC.; MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT & POWER; HOMER ELECTRIC ASSOCIATION, INC.; ALASKA ENERGY AUTHORITY; and STATE OF ALASKA ATTORNEY GENERAL'S OFFICE, REGULATORY AFFAIRS A...
Attorney:Stuart W. Goering and Megyn A. Greider, Assistant Attorneys General, Anchorage, and Jahna Lindemuth, Attorney General, Juneau, for Appellant Regulatory Commission of Alaska. Michael E. Kreger and Sarah C. Gillstrom, Perkins Coie LLP, Anchorage, for Appellant and Appellee Homer Electric Associatio...
Judge Panel:Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and Carney, Justices.
Case Date:February 22, 2019
Court:Supreme Court of Alaska
 
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REGULATORY COMMISSION OF ALASKA, Appellant,

v.

MATANUSKA ELECTRIC ASSOCIATION, INC.; CHUGACH ELECTRIC ASSOCIATION, INC.; GOLDEN VALLEY ELECTRIC ASSOCIATION, INC.; MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT & POWER; HOMER ELECTRIC ASSOCIATION, INC.; ALASKA ENERGY AUTHORITY; and STATE OF ALASKA ATTORNEY GENERAL'S OFFICE, REGULATORY AFFAIRS AND PUBLIC ADVOCACY SECTION, Appellees.

HOMER ELECTRIC ASSOCIATION, INC., Appellant,

v.

REGULATORY COMMISSION OF ALASKA; CHUGACH ELECTRICASSOCIATION, INC.; GOLDEN VALLEY ELECTRIC ASSOCIATION, INC.; MATANUSKA ELECTRIC ASSOCIATION, INC.; MUNICIPALITY OF ANCHORAGE d/b/a MUNICIPAL LIGHT & POWER; and ALASKA ENERGY AUTHORITY, Appellees.

Nos. S-15944, S-15973

Supreme Court of Alaska

February 22, 2019

Appeal from the Superior Court No. 3 AN-14-08890 CI of the State of Alaska, Third Judicial District, Anchorage, Michael D. Corey, Judge.

Stuart W. Goering and Megyn A. Greider, Assistant Attorneys General, Anchorage, and Jahna Lindemuth, Attorney General, Juneau, for Appellant

Regulatory Commission of Alaska. Michael E. Kreger and Sarah C. Gillstrom, Perkins Coie LLP, Anchorage, for Appellant and Appellee Homer Electric Association, Inc. Robin O. Brena, Matthew C. Clarkson, and Kelly M. Moghadam, Brena, Bell & Clarkson, P.C., Anchorage, for Appellees

Matanuska Electric Association, Inc. and Chugach Electric Association, Inc. John J. Burns, Golden Valley Electric Association, Inc., Fairbanks, Alaska, for Appellee Golden Valley Electric Association, Inc. Dean D. Thompson and Jonathon D. Green, Kemppel, Huffman and Ellis, P.C., Anchorage, for Appellee

Municipality of Anchorage d/b/a Municipal Light and Power. Notice of nonparticipation filed by Brian Bjorkquist, Senior Assistant Attorney General, Anchorage, and Craig W. Richards, Attorney General, Juneau, for Appellee

Alaska Energy Authority; and by Jeffrey J. Waller, Assistant Attorney General, Anchorage, and Craig W. Richards, Attorney General, Juneau, for Appellee

State of Alaska Attorney General's Office, Regulatory Affairs and Public Advocacy Section.

Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and Carney, Justices.

OPINION

MAASSEN, JUSTICE.

I. INTRODUCTION

Electrical utilities entered into agreements for the purchase and transmission of energy from a hydroelectric project to utilities in distant service areas. Legislation exempted the agreements from the review or approval of the Regulatory Commission of Alaska (RCA); any disputes were to be resolved instead by a contractually established committee.

Along the transmission pathway was a substation leased by Homer Electric Association (HEA) to Chugach Electric Association (Chugach) and used by Chugach for the transmission of the distant utilities' electricity. When the lease expired, HEA filed tariff applications with the RCA, seeking approval of rates for its own transmission of the other utilities' energy. The other utilities objected to the RCA's jurisdiction, citing their agreements and the legislation exempting the agreements from regulatory review.

The RCA determined that it had the authority to consider the tariff applications. The affected utilities appealed to the superior court, which held that the RCA did not have that authority. HEA and the RCA petitioned for our review, challenging both the superior court's appellate jurisdiction and the merits of its decision regarding the RCA's authority.

We granted review. We reject the challenges to the superior court's jurisdiction. Furthermore, like the superior court, we conclude that the intent of the original agreements and of the governing statute was to exclude disputes like this one from the RCA's jurisdiction. We therefore affirm the decision of the superior court reversing the RCA's order.

II. FACTS AND PROCEEDINGS

A. Facts

1.

The Bradley Lake Hydroelectric Project

The Bradley Lake Hydroelectric Project (the Project), located approximately 27 miles northeast of Homer, began commercial operation in 1991.1 It "consists of a 125-foot high concrete-faced, rock-filled dam structure, three diversion structures, a 3.5-mile long power tunnel and vertical shaft, generating plant, interior substation, 20 miles of transmission line, and substation."[2] The transmission lines connect the power plant to the switching station at Bradley Junction, where Bradley Lake energy is transferred to transmission lines owned by HEA. HEA's lines include "the Soldotna Segment," a 46.8-mile segment from Bradley Junction north to the Soldotna Substation, owned by HEA and - until 2014 - leased to Chugach.

2.

The HEA/Chugach lease

Chugach entered into the lease with HEA to "operate and maintain" some of HEA's transmission facilities in September 1985, six years before the Bradley Lake Project began commercial operation. The leased facilities included the Soldotna Substation and two transmission lines connecting that substation with one near Quartz Creek, owned by Chugach. The lines from the Soldotna Substation to the Quartz Creek Substation are called the S/Q Line; they provide the only physical path for the transmission of electricity to utilities other than HEA.

The HEA/Chugach lease expired in January 2014, when HEA removed Chugach's metering equipment at Soldotna Substation and took over operation of the S/Q Line.

3. The Bradley Lake Agreements

Before the Bradley Lake Project was completed, certain Alaska utilities executed agreements for the sale, purchase, and transmission of Bradley Lake energy. Other than HEA, the utilities were what is known as "railbelt" utilities: their service areas lay along the route of the Alaska Railroad from Seward to Fairbanks. None of them owned transmission lines that would provide direct access to Bradley Lake energy.

The primary purpose of the Bradley Lake Agreements, therefore, was the creation of a transmission route for Bradley Lake energy for the utilities that operated to the north. Pursuant to the agreements, HEA transmitted railbelt utilities' energy from Bradley Lake via its Soldotna Segment, at the end of which-at the Soldotna Substation - Chugach accepted delivery. It was Chugach's responsibility to transmit the Bradley Lake energy farther on, first along the S/Q Line to the Quartz Creek Substation and then to more distant delivery points as designated by the other utilities. The sections that follow describe the Bradley Lake Agreements in more detail.

a. The Power Sales Agreement

The Agreement for the Sale and Purchase of Electric Power (Power Sales Agreement) had eight signatories: the Alaska Power Authority (Power Authority), the Alaska Electric Generation & Transmission Cooperative (AEG&T), [3] Chugach, HEA, Golden Valley Electric Association (GVEA), Matanuska Electric Association (MEA), the Municipality of Anchorage d/b/a Municipal Light & Power (ML&P), and the City of Seward d/b/a Seward Electric System. Under the Power Sales Agreement, the Power Authority - the predecessor to today's Alaska Energy Authority - agrees to sell, and the other parties agree to purchase, certain shares of the Bradley Lake Project's energy capacity. The Power Sales Agreement designates the physical point "at which the Purchasers accept delivery" of their Project energy: the switching station at Bradley Junction. The Agreement further provides that absent mutually-agreed termination or renewal, it remains in effect either for "50 years after the Date of Commercial Operation" or until all bonds issued to fund the Project have been "satisfied or provided for, whichever occurs later."

The Power Sales Agreement also establishes a committee - generally referred to as the Project Management Committee or BPMC - "responsible for the management, operation, maintenance, and improvement of the Project," including the "scheduling, production and dispatch" of Bradley Lake energy. The Project Management Committee, composed of the Power Authority and the purchasing utilities, is required among other things to "[a]dopt procedures ... for the resolution of disputes that may arise between or among the Purchasers and the Authority concerning the interpretation of this Agreement, the obligations created by this Agreement, or the performance of such obligations."

b. The Services Agreement

Chugach and the other energy-purchasing utilities, including HEA and AEG&T, contemporaneously entered into the Agreement for the Wheeling of Electric Power and for Related Services (Services Agreement), which governs the transmission of Bradley Lake energy from the Project to the railbelt utilities' own transmission systems. The Services Agreement contemplates that purchasing utilities will deliver Bradley Lake energy to Chugach at the Soldotna Substation, which is defined in the Agreement as "[t]he Soldotna...

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